Why is My $%@#! Cable Bill So High?

From MSNBC: “If your cable TV rates have gone up by 4 percent a year, you’re getting off relatively easy, according to a report last week form the Federal Communications Commission. Since 1996, the average monthly cable bill is up 93 percent, the commission reported last week.”

Uh, what? MSNBC blames Local Franchise Authorities. “Local Franchise Authorities — usually — regulate basic cable rates, though there are certain situations when these basic rates go unregulated. And rates for all other service tiers are unregulated.”

Phone companies are getting into the cable game, so with competition… the ability of the Local Franchise Authority to “regulate” prices may soon change. For the better, we hope. —MEGHANN MARCO

Well, that’s not entirely true. What would your cell phone bill be if there wasn’t competition? Yes, they’re all expensive, but it could be worse. Airline prices are certainly lower than they would be without competition, or else the airline companies wouldn’t be losing money year after year. They’d charge whatever they wanted and have big fat profits.

Competition is generally enough to keep prices low, but there are exceptions. Free market economics can only work well when a level playing field exists. When companies are given local monopolies (as they so often are with cable TV) or when the barrier to entry is prohibitively high (such as it is for telecommunications venures like phone and cellular companies), the whole free-market thing crumbles and a sort of defacto price-fixing occurs.

Occasionally there’ll be a “race to the bottom” price war, but if it lasts for any length of time, it tends to only favor the biggest and most diversified companies. The smaller guys just can’t survive on the resulting razor-thin profit margins. Look at Wal-Mart vs. every-other-retailer-except-maybe-Target, for example.

I agree with pestie. What’s ridiculous about the whole cable thing though is that there really is no competition in many places. In NYC, even though there are at least 2 or 3 cable providers, my building locks me in so I can only choose Time Warner. Time Warner has no incentive to provide me with better service, cheaper service, or anything that will benefit me at all. They know I can’t go anywhere else, which kinda defines MONOPOLY doesn’t it?

Anyone know how it is that buildings in NYC can choose a cable provider and prevent other providers from giving you service? I would imagine they get a kickback from choosing a certain provider, as well. Hmmmm….

Yes, competition absolutely lowers rates–when the govt broke up ma bell into a thousand pieces, the price competition for long distance service became so intense, the phone co.’s started cold calling ppl soliciting and asking them to switch.

There is virtually NO competition among cable companies–when I tried to sign up for Comcast they actually refused me–told me that I HAD to use Adelphia because of where I lived. Adelphia had my side of the street, comcast had the other. The two companies had Dade county carved up until comcast bought out adelphia. Now, if you can’t get sattelite where you live you are really stuck with a monopolizing company; not that sattelite is much better–it’s only nominally cheaper than cable. Subscription tv companies are robber barons.